Microsoft's videogame chief Shane Kim came by our New York office this morning for the Reuters Media Summit and shared his thoughts on XBox 360 sales ("cautiously optimistic") and the outlook for the gaming industry amid the economic doom-and-gloom ("Who knows, maybe flat performance will be considered a remarkable achievement").

He also gazed into his crystal ball and served up some insights on the trends shaping the gaming business.

Consolidation is going to continue, he thinks, especially among the smaller videogame publishers as they search for hit games while keeping costs in check.

"There are a number of mid-tier publishers behind the Electronic Arts and Ubisofts and Activisions of the world who are struggling."

Another exciting trend for Kim is the return to videogame content developed by small creative teams, which he thinks could reduce the industry's dependence on sequels of hit games.

"That would be a good thing... because one of the challenges the industry has had, in my opinion, over the last five to 10 years is a growing reliance on sequels and licensed properties as opposed to those new creative hits. If we can find those nuggets that start smaller and can grow into big hits, that's a great thing."

He did wonder how smaller creative shops could find funding for their pitches, given that dollars could be hard to come by these days. But at the same time, it's an opportunity for bigger publishers, he said, since nothing rocks the gaming world like a hit game.

(Photo: Reuters)

If you're an old Sirius or former XM subscriber who lost one or more of your favorite channels after the two satellite radio companies merged earlier this year, CEO Mel Karmazin has a message for you: Tough luck, it's for the greater good.

Karmazin told reporters at the Reuters Media Summit in New York that the two companies had taken the best of breed in each music channel genre from either Sirius or XM as part of a $400 million cost saving drive.

"We're going to pick the best channels," said Karmazin. "We've gotten hundreds of people who hated it and claimed they were going to cancel. So we've analyzed all the cancellations since the rationalization...It's hard for me to understand what they don't like."

"If we took the most aggressive number of people who cancelled and we take that (away) the $120 a year (they pay) it doesn't get to a $1 million as compared to the significant amount of cost savings as a company that needs to make money," said Karmazin.

Our colleague Franklin Paul said he was upset with the loss of his favorite classic hip-hop channel, The Rhyme. So Karmazin made his best pitch to an old school B-boy.

"We have other hip hop channels," coaxed Karmazin.

"You as a subscriber, though you may miss your channel, you need to make sure we make money because you want us to be around so we can invest in programming and we can provide you with all these services," said Karmazin.

In other words, deal with it.

(Photo: Reuters)

Sirius XM Chief Executive Mel Karmazin is a serial monogamist when it comes to stocks. No matter where he’s worked, from Viacom to Sirius, he only buys stocks in those companies, he told the Reuters Media Summit in New York on Wednesday.

Lately, at Sirius, “every dime I’ve taken in has been spent buying stock,” he said. To show his fidelity, he wears special cufflinks in his shirtsleeves. One says “XM.” The other says “Sirius.”

Otherwise, he steered clear of stocks in the past decade or so, opting for tax-free municipal bonds or treasury bills. “So I have been a terrible investor because if you look at the past 12 years, my portfolio has only grown… 3 percent a year. If you look at stock market at that period of time, I’ve left an awful lot of money on the table. Over the last year… I’ve done ok compared to where a lot of people were.”

Speaking of Sirius, he notes all the media reports that peg his annual compensation at $32 million are not quite right.

“When I came to the company, I got 33 million options at $4.72 (each). You take the Black-Scholes formula, and it was worth $150 million. Over five years, that’s $30 million a year. And I’ve never sold a share. That four dollars and 72 cents is now worth 18 cents.”

That sounds fairly underwater to us.

(Photo: Reuters)

Gaming insiders who have given consoles the death sentence, get a life!

Shane Kim, VP of Strategy and Business Development at Microsoft Corp's Interactive Entertainment Business, said it's too soon to write off the Xbox.

"This console generation will have a long life cycle. I think it's way premature to say there will never be another Xbox," said Kim at the Reuters Media Summit.

Industry veterans like WildTangent Chairman Alex St. John and Sandy Duncan, who set up and ran the European Xbox business for Microsoft, believe that consoles as we know them are doomed. Duncan said they will "die out " in the next five to 10 years, according to an interview published in www.Thatvideogameblog.com.

Such forecasts are based on views that gaming consoles will be rendered obsolete by the increasing convergence of devices such as set top boxes and the fact that gamers will increasingly turn to the Web for new cool applications.

Kim admitted there was a lot of room for expansion via the Web.

"What's interesting to think about will be what will define the next generation. It is absolutely a possibility where the next generation is defined by what we can do online rather than the hardware," he said.
"We can reinvent the experience with the magic of software," he said.

MySpace co-founder Chris DeWolfe is bullish on the mobile advertising market, but says ad agencies and corporate sponsors haven't figured out to dial into it.

Speaking at the Reuters Media Summit, DeWolfe outlined MySpace's mobile efforts, such as its Blackberry application. He said the company was targeting more download applications for mobile devices. He said he saw big opportunities in the mobile-based advertising sector once there's some standardization.

We think the future of mobile is more advertising based. But the marketplace on the advertiser side has not quite caught up to the inventory out there... It's relatively undeveloped, but we think it's a market that will grow.

He said countries like Japan were ahead of the curve in mobile advertising, but that it will take the U.S. a couple of years to catch up.

We're generating revenues right now on the mobile side from advertising and will generate more next year. ... It's a function of whether the agencies and brands coming up with standardized ad units and are making investments to do that.

So far there's been enough inventory on the MySpace side, but not enough advertisers with creatives that have wanted to jump in or a critical mass of Web sites that they've wanted to reach. But we'll see more demand and its a function of educating the marketplace.

Are people going to watch more TV because they've no money to go out? According to media buying and planning agency MPG -- a subsidiary of Havas, the world's sixth-largest ad firm -- the answer is no, unless the TV networks come up with better shows.

"That's inventory for us, that's our supply," MPG Chief Operating Officer Steve Lanzano told the Reuters Media Summit in New York. "The thing is, there are no hit shows out there on the big networks," he added. "And if there's no supply in the marketplace, that just makes it harder and harder for us."

With the economy seizing up and people seeking more stay-at-home entertainment, this could be the perfect time for the big networks to hook people on to some new shows and boost ratings. That would bring in advertising revenue at a time when many advertisers are scaling back spending.

But the networks don't seem quite up for it yet, Lanzano said. ""They need hits and nobody has them right now."

Fox, Lanzano said, was a bit edgier than the others. "Clearly, they have these must-see shows that they've been able to promote."

Meanwhile, CBS -- which probably has the largest number of total viewers -- could do with some younger programming, Lanzano said. "Have they been able to lower their age a bit?"

As for NBC, "they've been fortunate because of Sarah Palin." Shows like 30 Rock and of course, SNL, have gotten a boost because of Tina Fey's turn as the former Republican vice-presidential candidate, but with Jay Leno going off the air soon, they might be stuck looking around for another winner.

ABC has done well with younger viewers, but still needs a big audience winner to bring home the big bucks, Lanzano said.

Only the cable channels have met with some success in churning out hit shows, he said. "To some degree you see the breakout hits are on the HBOs and the Showtimes because their hands are not tied." Cable channels also give their shows more time to grow, unlike the networks, which try too many different things in hopes of a quick hit.

Sumner Redstone is selling low -- way low. Here's The Wall Street Journal with the news:

In an effort to help resolve his debt problems, Sumner Redstone has sold his controlling stake in videogame company Midway Games Inc to a private investor.

Mr. Redstone's holding company, National Amusements Inc., is expected to announce Monday that it sold its 87% stake in Midway to investor Mark Thomas, a move that represents a significant loss on the media mogul's investment but secures a hefty tax benefit as he negotiates other asset sales.

Redstone has been discussing selling all sorts of assets, including movie theaters and his holding in slot machine company WMS Industries, the Journal said.

What next? Redstone already said he wouldn't sell any more shares in Viacom and CBS to cover his debts. But the Journal says the Redstone family is discussing securing their outstanding debt ($1.6 billion) with their remaining assets. Let's watch those stocks...

Keep an eye on

• It's Reuters Media Summit week in New York City, when we get a bunch of executives in a room and get them to tell us about how they're negotiating the downturn. There will even be TV. (Reuters)
• Call it dumb luck. We knew USA Today was going to cut 20 jobs in its newsroom, but one of our reporters on holiday shopping coverage found a business-side person at Gannett's and the nation's biggest paper who said there are going to be cuts on her side too. A Gannett spokeswoman confirmed that this will happen, but a spokeswoman for the paper wasn't available to tell us how many will go.
• Nearly everyone has written about Michael Wolff's new Rupert Murdoch book. Here's a quick link rundown. Janet Maslin's review in The New York Times is quite interesting. For the others, there's us, Bloomberg, the Financial Times, MarketWatch, The Independent and The Age.

It’s not every day that you have a top executive in big business talk about how nice it will be to see the back of the Bush administration. Republican presidencies typically tout their adherence to free markets, unbridled capitalism and, most importantly, a smaller pile of what corporations often consider burdensome regulations. That isn’t what they usually expect from Democratic administrations, even ones led by Barack Obama.

That’s why we thought it so interesting that Time Warner Cable’s chief financial officer, Rob Marcus, is happy for some turnover at the Federal Communications Commission. It is the FCC, after all, that has to approve some key licenses for Time Warner Cable’s split from its majority owner, Time Warner Inc. For some reason, the FCC can’t seem to find room on its schedule to do that, and that seems to have irked Marcus. It is, after all, preventing the two companies from separating by the time Time Warner Cable said it would.

“There’s nothing substantive that has currently arisen in connection with the FCC approval. They just haven’t put it on the agenda,” he told the Reuters Media Summit in New York on Monday.

The FCC has made no special demands, he said. Rather, it just hasn’t seen fit. He did note that Chairman Kevin Martin, a Republican, seems to be the stick in the mud, but declined to talk more about why he thinks this.

So what is he looking for from a commission where three of its five members are selected by the upcoming Obama administration?

“We’re looking forward to a little more rationality.”